What are the types of DeFi? What areas does the DeFi project cover? Learn about the current status of DeFi

Original Author | ShapeShift Translation | Ryan_ 头等 仓

DeFi is an abbreviation of decentralized finance. There are five types of projects on DeFi: borrowing, decentralized exchanges, derivatives, payments and assets. This article briefly introduces some projects in the DeFi field. ( More on DeFi can be found in the Babbitt-First Class column, "Science: What is DeFi and How Does DeFi Work?" Two )

  If you are in the crypto space, you may have heard of DeFi. This has been one of the main buzzwords of the fintech community in 2019. Although it sounds like a blockchain application, DeFi is not an application. It is actually an abbreviation for the term Decentralize Finance.

The idea behind the concept is simple: take value from banks, governments, and other intermediaries, and let individuals control their finances.

From a technical perspective, saving more value for individuals and leaving money in their pockets means two things. First, all the technical tools currently embedded in the decentralized technology ecosystem are well utilized. Second, both developers and users continue to look for new ways to make true decentralized financial systems easier to implement. Its goal is to make spending, investment, and borrowing seamless in practice and completely democratize its structure.

Which blockchains use DeFi?

There are currently more than 20 different blockchain projects that can help people control their financial situation. Most DeFi projects are executed on Ethereum. Ethereum is committed to being the largest decentralized computer in the world. It allows developers to fund their applications, build projects, and share them with the world without the need for large technology intermediaries like Google or Apple to promote innovation, release, or marketing.

Currently, there is only one blockchain project related to decentralized finance on the Bitcoin network, namely the Lightning Network. This is the second layer of code on the Bitcoin blockchain, used to create smart contracts, which can be executed automatically without the need for a third party to supervise transactions. This makes transaction costs lower. Lightning Network can also complete the following tasks:

· Instant payment: Lightning Network can be used for point-of-sale terminals to facilitate instant transactions. This makes Bitcoin's daily transactions easier and more practical.

· Micropayments: Lightning Network allows transactions as small as 1 Satoshi to be confirmed on the blockchain. This makes it easier to pay for consumer content or get change from friends or merchants.

Scalability: Scalability in Lightning Network enables both parties to conduct unlimited transactions off-chain. Only the final transaction result needs to be chained. This is very efficient.

DeFi Project Type

Many other important DeFi projects in the blockchain world are hosted on the Ethereum network. These projects are designed to make assets more accessible to everyone to ensure adequate liquidity. The ultimate goal is to make things as seamless as possible and make cryptocurrency and blockchain technology easier to use.

These items fall into five categories:

· Lending · Decentralized exchanges · Derivatives · Payments · Assets


MakerDao is currently the most popular DeFi project on the Ethereum network. Currently, the project has locked in more than $ 309 million in user funds. The project itself is a decentralized lending platform to support DAI.

DAI is a stable currency whose value is pegged to the US dollar. It allows anyone who uses MKR to open a Mortgage Debt Position (CDP), which means they lock Ethereum as collateral and generate DAI as debt. In other words, users borrow money with Ethereum, and money is DAI. DAI debt incurs a stabilization fee and is paid in MKR tokens when DAI is lent.

Users can borrow up to 66% of the value of the collateral (based on a 150% mortgage rate). CDPs below this rate will be fined and liquidated for 13 to get the CDP out of default. Liquidation collateral is sold at a 3% discount on the open market.

Other DeFi lending projects also want to achieve the same efficiency, including Compound, InstaDapp, dYdX and Nuo Network.

Decentralized Exchange Project

Head decentralized exchange projects on Ethereum include Uniswap, Bancor, and Kyber. Of the $ 33 million locked in these three projects, more than two-thirds are in Uniswap.

Uniswap is a fully decentralized on-chain protocol that uses liquidity pools rather than order books to facilitate transactions. Anyone can trade between Ethereum or any other token using the ERC-20 protocol. Traders can also earn fees by providing more liquidity to the market and lending their tokens to exchanges.

Uniswap does not have its own token, but each trading pair can be represented by a freely transferable ERC-20 token. All transaction fees are added to the appropriate transaction pool, and the cost of each transaction is about 0.3%.


A derivative is essentially a synthetic asset that represents the real world. Creating such assets on the blockchain allows users to access real-world markets while providing the security that comes with a decentralized network.

Synthetix controls nearly $ 88.5 million in assets and represents 20 different synths related to cryptocurrencies, fiat currencies and commodities. The project plans to introduce stocks and indexes in the future.

Other derivatives-based projects include prediction markets, which is one of the most popular user cases for blockchain projects. Augur is a peer-to-peer project that is popular in this field. It enables anyone to create markets around real-life events. Given that gambling has made one of the most popular uses of cryptocurrencies, prediction market items have been booming.


The Lightning Network can process $ 7.7 million in payments at any given time and is the only payment network on the Bitcoin blockchain.

There are two payment items on the Ethereum network: xDai and Connext. xDai is a sidechain project with a block time of 5 seconds and lower gas costs. It is associated with POA Network and MakerDao. Connext essentially allows users to load a card with value and use it instantly.


WBTC is an ERC-20 token supported by Bitcoin. The idea behind it is to bring a lot of liquidity on the Bitcoin network to Ethereum. WBTC trades on both decentralized and centralized exchanges. Users can exchange WBTC through eight different merchants. Exchanging assets requires users to go through anti-money laundering (AML) and KYC procedures. This plan is supported by a decentralized autonomous organization and 16 different projects, all of whom are interested in decentralized finance. These include Dharma, MakerDao, Set Protocol and Compound.

The future of DeFi

The existence of a decentralized financial world is to continue to provide democracy and proxy for user value, and make the cryptocurrency market more stable and accessible. This means it can be used by consumers, businessmen, investors and institutions. Innovation is making DeFi a real-world use case, providing the technology with ways and potential to impact the world.

This article is from Medium and translated by First.VIP . Please retain the information at the end of the article.


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